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Liability Insurance

Living in a time wherein eventualities do not come knocking and uncertainties are at its peak. Having correct insurance acts as a safety net provider, which shields one from unwanted financial, expenses that may arise without prior knowledge.

Having a plethora of insurance options accessible in the market, there are certain specific insurance policies, provide coverage against certain issues, and therefore are not generic. One such policy is the liability insurance policy.

What is  Liability Insurance Policy

Liability insurance is an insurance policy, which protects the insured party against perils that may be held legally liable.

If an insured is liable for the damage/injury caused to a third-party which can be a person or property then under such a circumstance the insurance company will compensate for the loss.

Moreover, the liability insurance policy provides coverage for legal payouts and legal costs for which the insured is held responsible for. Besides, most of the liability insurance policy does not cover contractual and intentional damages.

Importance of Liability Insurance Policy

The Public Liability Act, 1991, defines the scope of liability insurance policy in India. Besides, liability insurance is covered under general insurance policies.

In simplest words, This insurance policy is designed for the companies/individuals who are liable legally for the injuries or other issues. This type of policy is suitable enough for doctors, business owners, hospitals, etc. For instance, if a product manufacturing company sells a product that does damage to other people or products, then under such a circumstance the manufacturing company may be sued for the loss/damage caused by its product.

Moreover, if this manufacturing company has a liability insurance policy, then the insurer will cover expenses incurred for the loss.

Types of Liability Insurance Policy

Depending upon the requirement and line of work of the customers, the common types of the liability insurance policy are:

Public Liability Insurance

This policy caters to industries/companies that experience trespassers or visitors in huge amounts. Public liability insurance is a mandate in some countries. Regardless, of whether it is mandatory or not, it is highly recommendable to take this policy and circumvent any financial perils. This policy is advisable to be taken by shopping malls, clubs, spots where adventurous events are held.

Employer Liability

This policy is designed to cater the employees by the employers who may get injured in an unfortunate circumstance because of the job. This policy is also referred to as Business Liability Insurance.

Product Liability

This policy is mostly required for the companies, which deal with the production of tobacco, medical-related products, recreational products, chemicals and so on. It is to be noted that this policy is a compulsion in many countries across the globe.

Third-party Liability

This policy caters to small industries or individuals and provides coverage against any damage/loss caused by them to the third-party. Under third-party insurance, the first party is the insured, the second party is the insurance provider and third-party is the injured or the person who is claiming the insured.

Deciding the Premium Amount of the Liability Insurance Policy

Various factors are taken into consideration before deciding on the premium rate for a liability insurance policy taken either by the company or an individual.

Primarily, the factor, which affects the premium rate of a policy, is the amount of risk that the products of the company or company come up with. Remember, the higher the risk, the higher would be the premium amount to be paid.

Besides, some other important factor that is considered by the insurance company comprises of the claim history of the insured, the approach of the company towards the peril and the business record of the company.

Companies Offering Liability Insurance Policy

In the below grid, is a list of insurance companies, which offers liability insurance policy:

Insurance Provider

Key Benefits

Reliance Public Liability Insurance Policy

- Provides coverage for legal liability risks to both industrial and non-industrial inception.

- Provides coverage against different types of third-party liability risks.

- Provides extendable coverage for risks, which includes pollution, effluents, Acts of God, and so on.

- Offers the alternative for voluntary excess enabling a discount in premium.

ICICI Lombard Public Liability Policy

- Under industrial risks, it provides coverage for any legal liability towards damages to third-party, which includes accidental death, bodily injury/damage, loss/damage to property and so on.

- Under non-industrial risks, it provides coverage for any legal liability towards damages to third-party which includes accidental death, bodily injury/disease and loss/damage to the property. 

TATA AIG Public Liability Insurance

- Provides coverage for industrial and non-industrial risks.

- Offers comprehensive protection under, which the policy can be extended to cover expenses incurred due to any legal liability.

- Offers the benefit of the retroactive date.

HDFC ERGO Public Liability Policy

- Provides coverage for all sums inclusive of defence costs in case of any accidental death or bodily injury to a third-party or any accidental damage belonging to the property of third-party.

- One can extend the policy and provide coverage to the liability as a result of judgements or settlements made across the globe.

Bharti AXA Commercial General Liability

- It is a combination of both public and product liability.

- Offers coverage to Indian companies having global operations with international partners.

- Offers coverage to foreign companies operating in India.

- Provides comprehensive coverage against bodily injury, property damage, payment for medicals. Personal injury and advertising injury.

Claim Process of Liability Insurance Policy

There is no conventional claim process for liability insurance as it relies upon the insurance provider and subsequently, it shifts from organization to organization.

By and large, in the vast majority of the insurance claims, a claim form with all the necessary records must be submitted to the insurance provider. Be that as it may, for liability claims, this procedure isn't basic.

There can be legal disputes or out of the court settlements. Thusly, the procedure of claim unquestionably is diverse as indicated by the claims that are made.

Why Policy Bazaar?

PolicyBazaar compares quotes from driving insurance companies in India so you can be guaranteed that you can discover the liability insurance that suits your necessities the best.

Discover the amount you can save money on liability insurance for your business by contrasting and purchasing plans from PolicyBazaar. Just enter your subtleties on our simple to-utilize application structure and start comparing!

Written By: PolicyBazaar - Updated: 20 January 2020

What is Liability Insurance?


Liability Insurance is an insurance policy that offers cover to individuals and businesses/companies for the situations where a legal liability arises. Additionally, if the insured is sued because of harm caused to another person or property by him/her or his/her products or services, then the insured or his/her company gets covered under this policy.


How many types of liability insurances available?


There are various different types of liability insurances available, but some of the common liability insurance policies are third-party insurance, product liability, public liability, professional liabilities, employer liability etc.


What are the exclusions of a liability insurance policy?


Contractual liabilities and intentional damages are not covered by most of the liability insurance policies.


Which companies in India offer liability insurance?


Some of the renowned insurance companies that offer affordable and comprehensive covers for liability insurance policy are - TATA AIG, Bharti AXA, HDFC ERGO etc.


Do Charted Accountants use liability insurance? If so, how?


Yes, charted accountants avail the liability insurance. The liability insurance policy that is most favourable for a charted accountant is - Professional Liability Insurance.

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